…. As Challenge Air battle comes to a close
By Staff Reporter
After demanding a N$1.6 Billion bailout from government in September this year, transport minister John Mutorwa responded, “I saw a letter (pertaining to this matter). I am a member of the Cabinet committee on treasury, and I know there will be no bailout. Bailout coming from where? They must forget it.”
It appears though, that government have buckled to the demand, after all.
The Patriot is reliably informed that this week, members of Cabinet have together with Air Namibia’s management gathered secretly, to discuss a way out of the quicksand which the company finds itself sinking into.
In a letter by the national airline’s former board chairperson Deidré Sauls-Deckenbrock, she warned that,”the imminent cessation of business operations is the most likely impact of not adequately funding the company,” it was reported by a local daily newspaper.
Sauls-Deckenbrock, who has since resigned as Chairperson emphasised in the letter that Air Namibia want to resolve its dispute with Belgium company, Challenge Air. The company lost a court battle with costs which amounted to N$300 million four years ago.
“The company requires urgent shareholder capitalisation in the amount of N$1,6 billion to be paid in two tranches of N$800 million each by 31 August 2019 and 30 September 2019,” Sauls-Deckenbrock stated at the time.
Minister of Finance Calle Schlettwein at the time commented on the matter, calling it “complex”. He said that the parastatal had indeed made the request but it was unaccompanied by any indication of where the funds would be channelled into.
“You see, they are asking for N$1,6 billion just to pay creditors, but that is not the end of the story, there is more to it.
So, it’s a very complex matter, which is still under scrutiny. It’s before the Cabinet committee on treasury, and we are busy formulating a strategy for them,” he had said.
Now under the Chairmanship of Escher Luanda, the airline has secured a bailout of N$ 500 million which will enable it to settle some of its debt.
Among these debts to be paid, is the A330 Embraer jet which is currently stranded in Malta after Air Namibia failed to pay for it repair during the course of October 2019.
The amount outstanding is 1,3 million Euros.
According to documents The Patriot is privy to, Air Namibia was denied refuelling by (GFS) German fuel Service GmbH (as a service provider) and was prohibited from buying the kerosene from GFS.
GFS had received a “Vorpfändung” (seizure notice) on Friday, 01 November, therefore when Air Namibia wanted to buy kerosene on that same day, GFS refused, due to the “Vorpfändung”. Air Namibia, in shocking fashion then proceeded to fly to Portugal to refuel the aircraft.
On Monday the 11th of November, the managing director of GFS has a long-planned business meeting with the CEO of Air Namibia in Namibia. He will also raise this seizure matter in Namibia.
Is Air Namibia still a safe option ?
The Patriot reported four weeks ago on the International Civil Aviation Organisation (ICAO) audit report and the daunting findings that it exposed. A record number of 500 safety findings were believed to have been breached.
Of the findings were that Air Namibia does not have a process to be used in the event of an emergency situation that endangers the safety of the aircraft or persons, including those situations that become known first, to the flag carrier.
According to the report, such process ensures that the Fixed Open Findings (FOA) initiates emergency procedures while avoiding taking any action that would conflict with air traffic control (ATC) procedures; notifies the appropriate authorities, without delay, of the nature of the situation; requests assistance if required, and conveys, by any available means, safety-related information that may be necessary for the safe conducting of the flight, including information related to any necessary amendments to the flight plan.
Various further inadequacies at the parastatal were cited and were to be corrected. Seventy (70) of the safety audit recommendations made, have not yet been fulfilled.
Air Namibia have been given until the 15th of November to conform to the International Air Transport Association (IATA) standards.
Unlevelled playing field
The struggling national airline additionally owed the Namibia Airports Company (NAC) just below N$500 million in March of this year, for landing fees and airport taxes, a debt that had escalated over a period of time and never been settled.
This publication had learned in March of this year, that the nearly half a billion dollars owed to NAC by Air Namibia had pushed the airports company into entering an agreement with the International Air Transport Association (IATA) for the collection of money from Air Namibia through IATA.
By July, Bisey /Uirab, (NAC)’s chief executive officer, revealed in a presentation at a parliamentary standing committee on economics and public administration hearing that Air Namibia owes NAC N$522 million in user fees.
/Uirab told the committee that the airline is their biggest revenue generator, but it has not paid any fees.
“Only N$2,2 million was collected from Air Namibia in the 2019 financial year, compared to N$209 million in revenue generated from the client.
The NAC has an above acceptable credit risk exposure related to Air Namibia as the outstanding balance constitutes 250% of revenue earned,” /Uirab told the committee.
Where to from here?
Air Namibia, according to our sources have secured a bail out amount of N$500 million from treasury, rather than the N$1,6 billion as had previously been requested. This bailout will be announced after the elections on 27th November.
The parastatal’s management believes that with this cash injection, they will be able to turn Air Namibia’s fortunes around.
They have presented a plan which among other moves, maps out the decision to settle the debt with Challenge Air and to settle accounts with service providers.
A draft agreement is currently in place. Industry insiders heap praise of the “visionary leadership of Luanda”, citing a renewed focus among some members of the executive.
Challenge Air to date have recovered close to 10 million of the 25 million Euros owed to them by Air Namibia.
Board Chairperson, Escher Luanda, when approached for comment said that he was unaware of any meeting taking place, directing this reporter to forward questions “to the head of communications as per the communications philosophy of Air Namibia.”
The Patriot forwarded a list of questions to Air Namibia’s acting CEO Xavier Masule’s office, after being requested that questions be sent via email.
What do the experts say?
At the European Union Aviation Safety Agency’s annual safety conference in Helsinki this week, industry experts noted that “compromises on safety run the risk of losing the confidence of the general public,” as said by Pekka Henttu, Director General of Civil Aviation at a Finnish aviation agency, Traficom.
Speakers warned repeatedly that strong growth in the aviation industry in coming years meant that more had to be done if the safety records were to be maintained.
Topi Manner, CEO of Finnair said, “aviation is a growth industry. If aircraft and flight numbers double in the next decade, maintaining the current fatal accident rate would mean significant absolute increase in fatalities. That is not acceptable. We must continue to improve safety.”
The conference discussed that aircraft leasing is a growth area in the industry with different scenarios and business models related to seasonality or shortages of aircraft. It was generally agreed that leasing did not in itself create any compromise on safety, but that the regulatory system may need to better evolve to support increased leasing transactions.
Finally, the case for reinforcing the safety management function within an airline was discussed.
The meeting agreed that support from the top of any organisation was a key component in establishing and maintaining a safety culture.
A multi-disciplinary top management team with operational experience and engineering knowledge, trained safety managers at a senior level in the organisation as well as open exchange with operational staff were key assets.
Minister Calle Schlettwein, when contacted for comment stated he was in a meeting and thus was unavailable to comment at the time of going to print.